Big energy users key to price cuts

Big power users would be encouraged to reduce energy consumption as part of a Coalition plan to reduce electricity price rises.

Capitalising on public concern over price rises of up to 18 per cent in NSW and the impact of the carbon price, Opposition environment spokesman
Greg Hunt
unveiled the proposal after consultations with the energy sector. Around the country, over half the power price rises are due to network costs, largely driven by increasing peak demand.

“What happens is that we overbuild and in particular utilities have overbuilt to deal with the six or seven or eight days a year when there’s very high electricity demand," Mr Hunt told ABC-TV.

“If you build in the capacity to reduce demand on those days by striking agreements with large energy consumers, be they the supermarkets that can power down their large refrigeration units on hot days and then do the cooling later on at night, that can reduce quite significantly the pressure for poles and wires."

Under the plan, big energy users would be encouraged to sell reduced energy use into the National Electricity Market, as in Western Australia, to reduce the pool price of electricity during peak periods.

The announcement came ahead of the release of a new review of demand-side participation (DSP) options in the NEM by the Australian Energy Market Commission.

In submissions to the review, AGL and distribution company AusGrid backed increased use of demand-side measures, including smart meters and introduction of time-based charging.

“It is also necessary for third-party aggregators to be able to aggregate load from multiple sites and bid it into the market as a whole," AGL said in its sub­mission.

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Ausgrid estimated that for each additional mega-watt required to be delivered by the electricity system, $3.3 million of assets needed to be installed.

“In the current situation, the key role for the demand side is to manage peak demand," Ausgrid said.

But TRUenergy warned price signals needed to be an important tool to incentivise customers to reduce consumption during peak demand. “One factor DSP needs are higher market prices," it said.

Mr Hunt said the opposition would also reduce power costs by removing the minerals resource rent tax. But the MRRT is not expected to be paid on brown coal and the price of black coal is set by global commodity markets. “The MRRT is all about increasing costs and they will be passed through the system – that is our advice," he said.